MMJ
sells a motorized vibrating medical device called
“Buzzy” that reduces the pain of hypodermic
needle injections. MMJ filed a trademark application for the
Buzzy mark with the United States Patent and Trademark Office
(“PTO”) in 2006. According to the Statement of
Use that MMJ filed with the PTO in 2008, the Buzzy mark was
first used in interstate commerce on October 14,
2008.[1] The PTO issued a registration (No. 3, 559,
172 (“the ‘172 Registration”)) to MMJ for
the Buzzy mark in 2009.[2]

VMAS is
an Arizona company doing business under the name “The
TouchPoint Solution”; it was founded to sell “a
wearable Bluetooth connected device, with an associated
smartphone application, intended to relieve stress for the
wearer” (the “VMAS Device”).[3] VMAS launched the
VMAS Device under the name “Buzzies” in October
2016 and one month later launched a crowdsourced funding
campaign on Kickstarter.com
(“Kickstarter”).[4]

Conflict
between MMJ and VMAS ensued. MMJ states that it discovered
VMAS was using the Buzzies mark in late 2016.[5] MMJ informed VMAS
in a January 2017 cease and desist letter that Buzzies
infringes on the Buzzy mark.[6] VMAS responded by petitioning the
PTO's Trademark Trial and Appeal Board to cancel
MMJ's ‘172 Registration.[7] MMJ then informed
Kickstarter about the parties' trademark
dispute[8] and, according to VMAS, Kickstarter shut
down VMAS' fundraising site based on MMJ's claim of
infringement.[9] Although VMAS states that Kickstarter has
since restored its campaign website, VMAS is still prohibited
from using the Buzzies mark.[10]

VMAS'
two-count complaint seeks (1) a declaratory judgment that
MMJ's ‘172 registration is invalid; and (2) damages
and injunctive relief for MMJ's alleged tortious
interference with its business expectancies with Kickstarter.
VMAS' present motion seeks a preliminary injunction
enjoining MMJ “from asserting the defective ‘172
registration against VMAS or making any other false or
disparaging statements about VMAS, including claims of
infringement, in any public or commercial settings or forums,
and require that VMAS retract or otherwise withdraw its
infringement claim with Kickstarter.”[11]

III.
STANDARD OF REVIEW

Although
the decision to grant or deny a preliminary injunction is
committed to the district court's discretion, a
preliminary injunction is “an extraordinary remedy that
may only be awarded upon a clear showing that the plaintiff
is entitled to such relief.”[12]A plaintiff seeking a
preliminary injunction must satisfy the following four
factors: “(1) she is likely to succeed on the merits,
(2) she is likely to suffer irreparable harm in the absence
of preliminary relief, (3) the balance of equities tips in
her favor, and (4) an injunction is in the public
interest.”[13] “[I]f a plaintiff can only show
that there are ‘serious questions going to the
merits'-a lesser showing than likelihood of success on
the merits-then a preliminary injunction may still issue if
the ‘balance of hardships tips sharply in the
plaintiff's favor, ' and the other two
Winter factors are satisfied.”[14]

IV.
DISCUSSION

“To
acquire ownership of a trademark it is not enough to have
invented the mark first or even to have registered it first;
the party claiming ownership must have been the first to
actually use the mark in the sale of goods or
services.”[15] The Ninth Circuit in CreAgri
held that “only lawful use in commerce can
give rise to trademark priority.”[16]The plaintiff,
CreAgri, sold a dietary supplement called Olivenol “in
violation of 21 U.S.C. §§ 331(a), 343(a)
(prohibiting sale of misbranded food as determined by
reference to the relevant regulations).”[17] The
defendant, USANA Health Services (“USANA”), sold
“a series of vitamins, minerals, and nutritional
supplements containing an ingredient called Olivol,
”[18] which CreAgri alleged was confusingly
similar to its Olivenol mark. Although Olivenol was used in
commerce before Olivol, the Ninth Circuit held that the
Olivol mark had priority because Olivenol's use was
unlawful.[19] The court provided two rationales for
this result. First, “as a logical matter, to hold
otherwise would be to put the government in the
‘anomalous position' of extending the benefits of
trademark protection to a seller based upon actions the
seller took in violation of that government's own
laws.”[20] And second, “as a policy matter,
to give trademark priority to a seller who rushes to market
without taking care to carefully comply with the relevant
regulations would be to reward the hasty at the expense of
the diligent.”[21]

A.
VMAS' Claim that MMJ's Use of the Buzzy Mark Was
Unlawful

Relying
on CreAgri, VMAS argues that MMJ's mark is
invalid because MMJ was selling Buzzy unlawfully from 2008 to
2014. The parties agree that, as a medical device, Buzzy is
subject to regulation by the Food and Drug Administration
(“FDA”). Under the Medical Devices Amendments
(“MDA”) to the Federal Food, Drug, and Cosmetic
Act (“FDCA”), “medical device manufacturers
must register each device with the FDA prior to manufacture
of that device so that the FDA can classify each device
according to the ‘level of regulatory control necessary
to provide for the device's safety and
effectiveness.'”[22] Devices are classified into
one of three levels of oversight based on the risk they pose
to the public. “Class I, which includes such devices as
elastic bandages and examination gloves, is subject to the
lowest level of oversight: ‘general controls, '
such as labeling requirements.”[23] “Class
II, which includes such devices as powered wheelchairs and
surgical drapes, is subject in addition to ‘special
controls' such as performance standards and postmarket
surveillance measures.”[24] Class III devices receive the
most federal oversight; they include “replacement heart
valves, implanted cerebella stimulators, and pacemaker pulse
generators.”[25] “Manufacturers of such devices
must obtain premarket approval from [the] FDA to market the
devices pursuant to the requirements and procedures set forth
in [21 U.S.C.] § 360e
(‘PMA').”[26]

“Unlike
a manufacturer of a Class III device, which must go through
the ‘rigorous'” PMA process, manufacturers of
Class II devices “need only submit a ‘premarket
notification' to the FDA, in accordance with the less
burdensome ‘[§] 510(k)
process.'”[27] “If the FDA concludes on the basis
of the § 510(k) notification that the device is
‘substantially equivalent' to a pre-existing
device, it can be marketed without further regulatory
analysis . . . .”[28]

Class I
devices receive the least amount of regulatory scrutiny.
“Most Class I devices and a few Class II devices are
exempt” from the § 510(k) process
altogether.[29]21 C.F.R. Parts 862-92 contains §
510(k) exemptions for “over 800 generic types of Class
I devices and 60 class II devices.”[30] According to
the FDA's regulatory guidance, “[i]f a
manufacturer's device falls into a generic category of
exempted Class I devices as defined in 21 CFR Parts 862-892,
a premarket notification application and FDA clearance is not
required before marketing the device in the
U.S.”[31]

It is
undisputed that MMJ did not obtain § 510(k) clearance
before it began selling Buzzy in 2008.[32] VMAS contends
that such clearance was required for two reasons. First, VMAS
asserts that Buzzy is a Class II device.[33] But, because
this assertion is unsupported by any authority or evidence in
the record, the court cannot accept it. Second, VMAS points
to an August 13, 2014 decision from the FDA. In 2013 MMJ
submitted to the FDA a § 510(k) premarket notification
application for Buzzy.[34]The FDA's August 13, 2014 decision
on the application declares that the Buzzy device is
substantially equivalent to devices that do not require a PMA
application and clears MMJ to market the
device.[35] The FDA classified Buzzy as a
“therapeutic vibrator, ” which according to 21
C.F.R. § 890.5975 is a Class I device that is generally
exempt from the § 510(k) process.[36] This
exemption is subject to the limitations set out at 21 C.F.R.
§ 890.9.[37] With regard to non in vitro devices like
Buzzy, 21 C.F.R. § 890.9 provides that a device
manufacturer “must still submit a premarket
notification to FDA” where the device (1) is for a use
different than the intended use of a generic type of the
device or (2) uses a different fundamental scientific
technology than a generic type of the device. The FDA's
order concludes that MMJ was required to submit a premarket
notification for Buzzy because Buzzy “exceeded the
[l]imitations of exemptions from section 510(k) of the
Federal Food, Drug, and Cosmetic Act (21 CFR Part
890.9).”[38]The order does not explain how Buzzy
exceeded these limitations, nor does it specify which
limitation or limitations were exceeded.

VMAS
argues that the FDA's ruling definitively establishes
that MMJ was selling Buzzy unlawfully before the date of this
decision. Thus, VMAS argues, Buzzy's registration is void
ab initio.

B.
VMAS Has Not Shown That MMJ's Allegedly Unlawful Conduct
Was Material

If
unlawful use were the only requirement for extinguishing a
party's trademark protection, then VMAS' motion might
have merit. But the inquiry does not stop with unlawfulness.
It must also be established that the unlawful conduct was
“material.”[39]The Ninth Circuit adopted this
requirement from General Mills, a 1992 decision from
the Trademark Trial and Appeal Board. In that case General
Mills opposed Health Valley Foods' application to
register the mark “Fiber 7 Flakes, ” arguing that
it resembled its “Fiber One” mark. In turn,
Health Valley Foods argued that General Mills' use of the
Fiber One mark was unlawful because the product was
mislabeled under the FDCA when General Mills applied for
trademark registration. Although General Mills conceded that
its product was mislabeled initially, it argued that this
“failure to fully comply with FDA labeling requirements
pertained to only eighteen packages of cereal and . . . the
mistake was rectified a mere four months later when [it]
commenced national distribution of FIBER ONE brand
cereal.”[40] Under the circumstances, the Trademark
Trial and Appeal Board held that Health Valley Foods did not
meet its burden of establishing materiality.[41]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
CreAgri, CreAgri cited General Mills in
support of its argument that its unlawful use of the Olivenol
mark was immaterial.[42] The Ninth Circuit rejected this
argument, finding that the facts of the two cases were
&ldquo;categorically different.&rdquo;[43]
“Whereas General Mills corrected its labeling error
before its competitor's priority date-thus eventually
establishing the ‘lawful use in commerce' necessary
for trademark protection -CreAgri did not correct its
labeling error before USANA's priority date, and thus,
...

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